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Split Dollar For My Key Employees, Why Should I Consider This? | Selling Life & Annuities - YouTube
Channel: Gordon Marketing
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hey everybody it's randy pearson here
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with another episode of selling life and
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annuities
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i want to welcome you i want to
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introduce one of the newest members of
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our team ray parman
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our life and annuity rvp and today we're
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going to be talking about
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split dollar insurance i know it sounds
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like a complicated issue but we're going
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to try to make it simple for you
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stay tuned
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[Music]
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all right ray split dollar right i've
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been in the business for 30 or 35 years
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and it's one of those subjects that
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when i am out talking to agents and i
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mention split dollar they go oh i
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know nothing about the dollar yeah you
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know let's try to keep it simple how
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does split dollar work and why is it
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advantageous in a business owner
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selling situation sure well split dollar
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is really an incentive plan that a
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business can put together for their key
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employees
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to basically reward uh retain and
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recruit
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employees and to make that business
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of itself an even more competitive or
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competitor i should say
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on their market by you know bringing in
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talent and keeping them there
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and the product that we're using here i
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mean i assume because we're in the
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business of promoting marketing
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helping agents sell life and annuities
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is a life insurance
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product that is correct yeah we're
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looking at permanent life insurance in
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this play
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all right fantastic and so what are the
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advantages to the employer what i mean
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what does the employer really get out of
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this
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so by by implementing a split dollar
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plan the advantages to the employer
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they get to be selective they get to
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pick and choose who participates in this
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uh
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split dollar agreement and again we're
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probably focusing on the key employees
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of a particular business it's actually a
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very easy to implement plan
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the the cash value from the the life
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insurance actually
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sits on the business's balance sheet so
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it
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shores up the balance sheet for the
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business and also as we kind of
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discussed earlier
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it really contributes to employee
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productivity and loyalty too
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so it sounds like i mean i think what i
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sense this and what i got out of that
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was
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to some degree was that unlike for
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example a qualified retirement plan
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a business owner can be selective in the
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in this in this type of an arrangement
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so what are the advantages to the
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employee in these types of
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arrangements yeah so for for the
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employee what they're going to come away
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with is a
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a significantly larger death benefit or
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a life insurance policy that they
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can name you know their loved ones or
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you know the beneficiary of their choice
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so they're going to have that it's very
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cost effective and what i mean by that
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is now the business is going to pay
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the premium but the employee is going to
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simply pay the income tax on a lower
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term rate
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for that permanent life insurance
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coverage too so
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those are two primary advantages
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and then you know i'd say there's some
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versatility
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to it too because uh split dollar is
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great
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bringing somebody in but it also can be
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parlayed into maybe a
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non-qualified deferred comp play later
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on uh
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in their careers they are moving towards
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retirement okay
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so i really like this right i've split
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dollars a fantastic arrangement in my
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mind because
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there's advantages to the business owner
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in the business while also providing
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some personal
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benefit to those employees let's talk a
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little bit about um
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establishing establishing the plan i
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mean how do we put one of these plans
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together
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absolutely and again it's it's really
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straightforward i mean it's
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really identifying who you want to be
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participating in in that split dollar
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plan so again we're looking at key
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employees most likely
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they simply go through the insurance
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underwriting process
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and um at the end of the day you just
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write up the split dollar
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arrangement that suits the needs of the
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business owner
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and also of the employee and off you go
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so who
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who puts that arrangement who puts that
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document together
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uh oftentimes it's going to be a cpa or
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an attorney that can help out with that
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so it's not something that the advisor
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has to do although we can provide them
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with specimen documents and some samples
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and things like that
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but we're not creating the document
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we're providing the insurance piece
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correct
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yep um so speaking of the insurance
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piece then you know
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what is one what do one of these plans
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typically cost i mean what's caught what
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are the costs involved yeah so there's
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always a cost of everything isn't there
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so uh the the main uh cost is going to
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be on the the business owners
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or the the employers uh books there but
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you know that's gonna be further defined
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by the number of employees in the plan
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uh the desired death benefit and the
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type of product that we're actually
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going to fund this with
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too so the the main brunt of the cost is
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going to go to the employer
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but again the advantage to the employee
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is the fact that they are
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simply paying that that nominal income
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tax on that smaller
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term rate that they they use to
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calculate that cost of the insurance
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so sounds like the the cost of the plan
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and the the um the cost to the employer
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and implementing one of these strategies
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is really
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up to them it could be big or small
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depends on how much they want to put
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into it
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help retain that key employee and and
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put something together that's going to
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benefit them as well as the employee
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so um briefly this video is coming to an
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end but how can we help advisors
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get into this business owner insurance
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planning space absolutely uh
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you know we're here to help uh we're
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here um you know for
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phone calls but to move the the ball
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forward for somebody we have
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uh business training we have business uh
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fact finders everything that that
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somebody would want to
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use to help educate themselves uh even
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educate their clients and collect the
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appropriate
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uh information they can bring that into
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us and we can help analyze that too
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all right fantastic so if you're an
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agent out there and you'd like to learn
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more about how to get into the business
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owner insurance planning space
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make sure you reach out to ray he can
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get a fact finder in your hands he can
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also get you a guide
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on migrating into the business owner
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insurance arena
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but with that we must call this episode
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of selling life and annuity to the end i
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want to
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thank ray for participating today i'm
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randy pearson
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we're here at board marketing ready to
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earn your life and annuity business
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stay tuned every tuesday for a new
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episode of selling life and annuities
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we'll see you then
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you
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